- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 8-K
--------------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): February 22, 2006
-------------------------
CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
-------------------------
- ---------------------------- -------------------------- ----------------------
FLORIDA 1-13165 59-2417093
- ---------------------------- -------------------------- ----------------------
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
- ---------------------------- -------------------------- ----------------------
1655 ROBERTS BOULEVARD, N.W., KENNESAW, GEORGIA 30144
(Address of principal executive office) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 419-3355
N/A
(Former name or former address, if changed since last report)
-------------------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
- --------------------------------------------------------------------------------
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information provided pursuant to this Item 2.02 is to be considered
"filed" under the Securities and Exchange Act of 1934 ("Exchange Act") and
incorporated by reference into those filings of CryoLife, Inc. ("CryoLife") that
provide for the incorporation of all reports and documents filed by CryoLife
under the Exchange Act.
On February 22, 2006, CryoLife issued a press release announcing its
financial results for the quarter ended December 31, 2005 and fiscal year 2005.
CryoLife hereby incorporates by reference herein the information set forth in
the press release dated February 22, 2006, a copy of which is attached hereto as
Exhibit 99.1
Except as otherwise provided in the press release, the press release
speaks only as of its the date and shall not create any implication that the
affairs of CryoLife have continued unchanged since that date.
Except for the historical information contained in this report, the
statements made by CryoLife are forward-looking statements that involve risks
and uncertainties. All such statements are subject to the safe harbor created by
the Private Securities Litigation Reform Act of 1995. CryoLife's future
financial performance could differ significantly from the expectations of
management and from results expressed or implied in the press release.
Please refer to the last paragraph of the press release for further
discussion about forward-looking statements. For further information on risk
factors, please refer to "Risk Factors" contained in CryoLife's Form 10-K for
the year ended December 31, 2004, Form S-3 (Registration No. 333-121406), as
filed with the Securities and Exchange Commission ("SEC") and any subsequent SEC
filings. CryoLife disclaims any obligation or duty to update or modify these
forward-looking statements.
2
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Shell Company Transactions.
Not applicable.
(d) Exhibits.
Exhibit Number Description
99.1 Press Release dated February 22, 2006
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
CryoLife, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 22, 2006 CryoLife, Inc.
By: _/s/_D. Ashlee Lee__________________
Name: D. Ashley Lee
Title: Executive Vice President,
Chief Operating Officer and
Chief Financial Officer
4
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release dated February 22, 2006
5
FOR IMMEDIATE RELEASE
MEDIA CONTACTS:
D. Ashley Lee Katie Brazel
Executive Vice President, Chief Financial Officer and Fleishman Hillard
Chief Operating Officer Phone: 404-739-0150
Phone: 770-419-3355
CRYOLIFE REPORTS FOURTH QUARTER AND FULL YEAR 2005 FINANCIAL RESULTS
FOURTH QUARTER 2005 REVENUES INCREASED 13% OVER FOURTH QUARTER 2004
GROSS MARGINS FOR FULL YEAR 2005 INCREASED TO 53% COMPARED TO 40% IN 2004
ATLANTA, GA... (FEBRUARY 22, 2006)... CRYOLIFE, INC. (NYSE: CRY), a biomaterials
and biosurgical device company, announced today that revenues for the fourth
quarter of 2005 increased 13% to $18.0 million compared to $15.9 million in the
fourth quarter of 2004. The net loss in the fourth quarter of 2005 was $681,000,
or $0.04 per basic common share and $0.06 per fully diluted common share,
compared to a net loss of $2.4 million, or $0.10 per basic and fully diluted
common share in the fourth quarter of 2004.
Excluding a $512,000, or $0.02 per fully diluted common share, non-cash
gain for the change in the value of the derivative related to the Company's 6%
convertible preferred stock, and a $558,000, or $0.02 per fully diluted common
share, favorable adjustment to the product liability accrual, the adjusted net
loss in the fourth quarter of 2005 was $1.8 million, or $0.10 per fully diluted
common share.
Revenues for the full year of 2005 increased 11% to $69.3 million compared
to $62.4 million in 2004. The net loss for the full year of 2005 was $19.5
million, or $0.85 per basic and fully diluted common share, compared to a net
loss of $18.7 million, or $0.81 per basic and fully diluted common share for
2004.
Excluding an $11.6 million, or $0.49 per fully diluted common share, charge
for settlement of the shareholder class action lawsuit, a $702,000, or $0.03 per
fully diluted common share, favorable adjustment to the product liability
accrual, and a $851,000, or $0.04 per fully diluted common share, charge related
to post employment benefits, the adjusted net loss for the full year of 2005 was
$7.8 million, or $0.36 per fully diluted common share. - more -
Steven G. Anderson, President and CEO of CryoLife, Inc., stated, "We are
pleased with the Company's top-line performance in the fourth quarter of 2005.
We believe that the recent FDA approvals of our 10 milliliter BioGlue(R) syringe
applicator and our BioGlue spreader tip, and recent enhancements in our tissue
processing operations will serve as catalysts for continued operating
improvement during 2006."
BioGlue sales in the fourth quarter of 2005 increased 5% to $9.6 million
compared to $9.2 million in the same period in 2004. BioGlue sales for the full
year of 2005 increased 6% to $38.0 million compared to $35.7 million in 2004. U.
S. BioGlue sales were $7.2 million and $7.1 million in the fourth quarter of
2005 and 2004, respectively, and $28.7 million and $27.9 million for the full
year of 2005 and 2004, respectively. International BioGlue sales were $2.4
million and $2.1 million in the fourth quarter of 2005 and 2004, respectively,
and $9.3 million and $7.8 million for the full year of 2005 and 2004,
respectively.
Tissue processing revenues in the fourth quarter of 2005 increased 26% to
$8.1 million compared to $6.4 million in the fourth quarter of 2004. Tissue
processing revenues for the full year of 2005 increased 18% to $30.3 million
compared to $25.7 million in 2004. Tissue processing revenues increased
primarily due to an increase in tissue procurement and an improvement in
processing yields, which resulted in an increased number of allografts available
for distribution. The Company continues to experience strong growth in tissue
processing revenues during the first quarter of 2006.
Total product and tissue processing gross margins in the fourth quarter of
2005 were 54% compared to 49% in the fourth quarter of 2004. Total product and
tissue processing gross margins for the full year of 2005 were 53% compared to
40% for 2004. Tissue processing gross margins in the fourth quarter of 2005 were
21% compared to 6% in the fourth quarter of 2004. Tissue processing gross
margins for the full year of 2005 were 20% compared to negative (16%) for 2004.
Tissue processing gross margins improved in 2005 compared to 2004, primarily as
a result of the improvement in tissue processing yields and price increases.
General, administrative and marketing expenses in the fourth quarter of
2005 were $10.5 million compared to $10.7 million in the fourth quarter of 2004.
General, administrative and marketing expenses for the full year of 2005 were
$53.2 million compared to $42.6 million for 2004. General, administrative and
marketing expenses for the full year of 2005 include an $11.6 million charge
related to the settlement of securities litigation, $851,000 related to post
employment benefits and a $702,000 favorable adjustment to the product liability
accrual.
R&D expenses were approximately $1 million and $1.2 million in the fourth
quarters of 2005 and 2004, respectively, and approximately $3.7 million and $3.9
million for the full years of 2005 and 2004, respectively.
As of December 31, 2005, the Company had approximately $12.2 million in
cash, cash equivalents, marketable securities (at market), and restricted
securities.
Page 2 of 7
- more -
2006 GUIDANCE
The Company reaffirms its revenue guidance from early January 2006. The
Company expects tissue processing and product revenues to increase to between
$74.0 and $77.0 million for the full year 2006. The Company expects BioGlue
revenues to be $39.0 to $41.0 million and tissue processing revenues to be $34.0
to $35.0 million for the full year 2006. Bioprosthetic cardiovascular and
vascular device revenues are expected to be approximately $1.0 million in 2006.
The Company expects an increase in tissue processing gross margins during
2006 as compared to 2005 as a result of tissue processing improvement
initiatives implemented during early 2006.
General, administrative and marketing expenses are expected to be $44.0 to
$48.0 million for the full year of 2006. Research and development expenses are
expected to be approximately $5 to $6 million for the full year 2006.
The Company adopted SFAS 123 Revised "Share-Based Payment" in the fourth
quarter of 2005. The guidance for 2006 includes expenses associated with the
adoption of SFAS 123 Revised.
The Company will hold a teleconference call and live webcast at 11:15 a.m.
Eastern Time, February 22, 2006, to discuss fourth quarter and full year 2005
financial results, followed by a question and answer session hosted by Steven G.
Anderson, President and Chief Executive Officer.
To listen to the live teleconference, please dial 201-689-8349 a few
minutes prior to 11:15 a.m. A replay of the teleconference will be available
February 22 through February 28 and can be accessed by calling (toll free)
877-660-6853 or 201-612-7415. The account number for the replay is 244 and the
conference number is 191738.
The live webcast and replay can be accessed by going to the Investor
Relations section of the CryoLife web site at www.cryolife.com and selecting the
heading Webcasts & Presentations.
ABOUT CRYOLIFE, INC.
Founded in 1984, CryoLife, Inc. is a leader in the processing and
distribution of implantable living human tissues for use in cardiovascular,
vascular, and orthopaedic surgeries throughout the United States and Canada. The
Company's BioGlue(R) Surgical Adhesive is FDA approved as an adjunct to sutures
and staples for use in adult patients in open surgical repair of large vessels
and is CE marked in the European Community and approved in Canada for use in
soft tissue repair and approved in Australia for use in vascular and pulmonary
sealing and repair. The Company also distributes the CryoLife- O'Brien(R)
stentless porcine heart valve and the SG Model #100 vascular graft, which are CE
marked for distribution within the European Community.
- more -
Page 3 of 7
Statements made in this press release that look forward in time or that
express management's beliefs, expectations or hopes are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include the Company's belief that the recent FDA
approvals of our 10 milliliter BioGlue(R) syringe applicator and our BioGlue
spreader tip, and recent enhancements in our tissue processing operations will
serve as catalysts for continued operating improvement, its anticipated revenues
and expenses for 2006, anticipated increases in tissue processing gross margins
during 2006, and expected results and timing of planned tissue process
improvement initiatives. These future events may not occur as and when expected,
if at all, and, together with the Company's business, are subject to various
risks and uncertainties. These risks and uncertainties include that the
Company's efforts to reinvigorate revenue growth may not be effective, since
their effectiveness is subject to such factors as competitive pressures and
tissue availability, that the Company's efforts to develop and introduce new
products outside the U.S. may be unsuccessful, that the Company's efforts to
improve procurement and tissue processing yields may not prove effective, the
possibility that the FDA could impose additional restrictions on the Company's
operations, require a recall, or prevent the Company from processing and
distributing tissues or manufacturing and distributing other products, that
products and services under development may not be commercially feasible, that
the Company may not have sufficient borrowing or other capital availability to
fund its business, that pending litigation cannot be settled on terms acceptable
to the Company, that the Company may not have sufficient resources to pay
punitive damages (which are not covered by insurance) or other liabilities in
excess of available insurance, the possibility of severe decreases in the
Company's revenues and working capital, that to the extent the Company does not
have sufficient resources to pay the claims against it, it may be forced to
cease operations or seek protection under applicable bankruptcy laws, changes in
laws and regulations applicable to CryoLife, the possible accumulation of
additional shares by existing significant stockholders or by others which may
hinder the ability of the Company and its stockholders to realize the benefits
of the rights; other efforts by existing stockholders or others to gain
influence or control over CryoLife; existing or other potential litigation
initiated by stockholders or others; possible litigation by CryoLife if
stockholders or others make proposals or statements which CryoLife does not
believe to be fair or accurate or in the best interests of its other
shareholders and other risk factors detailed in CryoLife's Securities and
Exchange Commission filings, including CryoLife's Form 10-K filing for the year
ended December 31, 2004, its registration statement on Form S-3 (Reg. No.
333-121406), its most recent Form 10-Q, and the Company's other SEC filings,
including the Company's Form 10-K for the year ended December 31, 2005 which the
Company expects to file shortly. The Company does not undertake to update its
forward-looking statements.
- more -
Page 4 of 7
CRYOLIFE, INC.
Financial Highlights
(In thousands, except share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------- ---------------------------
2005 2004 2005 2004
---------------------------- ---------------------------
(Unaudited) (Unaudited)
(Unaudited)
(Audited)
Revenues:
Products $ 9,830 $ 9,424 $ 38,932 $ 36,637
Human tissue preservation services 8,088 6,442 30,307 25,676
Research grants 43 -- 43 71
--------------------------- ---------------------------
Total revenues 17,961 15,866 69,282 62,384
Costs and expenses:
Products 1,930 1,979 8,065 7,818
Human tissue preservation services 6,373 6,037 24,357 29,807
General, administrative, and marketing 10,499 10,672 53,225 42,640
Research and development 980 1,222 3,724 3,938
Interest expense 126 40 346 196
Interest income (123) (61) (531) (262)
Change in valuation of derivative (512) -- (140) --
Other expense (income), net (13) (14) 199 13
---------------------------- ---------------------------
Total costs and expenses 19,260 19,875 89,245 84,150
Loss before income taxes (1,299) (4,009) (19,963) (21,766)
Income tax benefit (618) (1,646) (428) (3,017)
---------------------------- ----------------------------
Net loss $ (681) $ (2,363) $ (19,535) $ (18,749)
============================ ============================
Effect of preferred stock (244) -- (777) --
--------------------------- ---------------------------
Net loss applicable to common shares $ (925) $ (2,363) $ (20,312) $ (18,749)
============================ ============================
Loss per common share:
Basic $ (0.04) $ (0.10) $ (0.85) $ (0.81)
=========================== ===========================
Diluted $ (0.06) $ (0.10) $ (0.85) $ (0.81)
=========================== ===========================
Weighted average common shares outstanding:
Basic 24,314 23,386 23,959 23,043
=========================== ===========================
Diluted 26,992 23,386 23,959 23,043
============================ ============ ============
Revenues from:
BioGlue $ 9,645 $ 9,226 $ 37,985 $ 35,745
Bioprosthetic devices 185 198 947 892
--------------------------- ---------------------------
Total Products 9,830 9,424 38,932 36,637
Cardiovascular 3,355 2,767 13,762 12,504
Vascular 3,172 2,522 11,453 10,293
Orthopaedic 1,561 1,153 5,092 2,879
--------------------------- ---------------------------
Total preservation services 8,088 6,442 30,307 25,676
--------------------------- ---------------------------
Other 43 -- 43 71
--------------------------- ---------------------------
Total revenues $ 17,961 $ 15,866 $ 69,282 $ 62,384
=========================== ===========================-
Domestic revenues $ 15,275 $ 13,489 $ 58,869 $ 53,244
International revenues 2,686 2,377 10,413 9,140
--------------------------- --------------------------
Total revenues $ 17,961 $ 15,866 $ 69,282 $ 62,384
=========================== ===========================
- more -
Page 5 of 7
CRYOLIFE, INC.
Unaudited Reconciliation of Adjusted Net Loss
(In thousands, except share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------- ---------------------------
2005 2004 2005 2004
---------------------------- ---------------------------
(Unaudited) (Unaudited)
(Unaudited)
Net loss - as reported $ (681) $ (2,363) $ (19,535) $ (18,749)
Add back adjustments to net loss:
Settlement of class action lawsuit -- -- 11,625 --
Product liability accrual (558) -- (702) --
Post employment benefits -- -- 851 --
Change in valuation of derivative (512) -- -- --
--------------------------- ---------------------------
Adjusted net loss $ (1,751) $ (2,363) $ (7,761) $ (18,749)
Effect of preferred stock (244) -- (777) --
--------------------------- ---------------------------
Adjusted net loss applicable to common shares $ (1,995) $ (2,363) $ (8,538) $ (18,749)
============================ ============================
Adjusted loss per common share:
Basic $ (0.08) $ (0.10) $ (0.36) $ (0.81)
=========================== ===========================
Diluted $ (0.10) $ (0.10) $ (0.36) $ (0.81)
=========================== ===========================
Weighted average common shares outstanding:
Basic 24,314 23,386 23,959 23,043
=========================== ===========================
Diluted 26,992 23,386 23,959 23,043
=========================== ===========================
- more -
Page 6 of 7
CRYOLIFE, INC.
Financial Highlights
(In thousands)
December 31, December 31,
2005 2004
------------ -----------
(Unaudited) (Audited)
Cash and cash equivalents, marketable securities, $ 12,159 $ 9,232
at market, and restricted securities
Trade receivables, net 10,153 8,293
Other receivables 1,934 3,957
Deferred preservation costs, net 13,959 8,822
Inventories 4,609 4,767
Total assets 76,809 73,261
Shareholders' equity 50,621 49,660
For additional information about the Company, visit CryoLife's web site:
http://www.cryolife.com
-----------------------
###
Page 7 of 7